Docstoc

Tax Homework

Document Sample
Tax Homework Powered By Docstoc
					January 5th2009  

Homework answers from Tax Credit Course  
 

Please complete the following: Indicate which of the following taxpayers qualify to claim the credit for child and 
dependent care expenses.  

             1.   Alice Keeler is divorced. Her daughter, Janet (5), lived with her all year. Alice would have been able to 
                  claim the dependency exemption for Janet except that she signed a waiver allowing her ex‐husband to do 
                  so. While she was working, Alice sent her daughter to the Kiddy Care Center. Yes. 
             2.   Christine Williams’ husband, Henry, was disabled and unable to care for himself for the entire year.  
                  Christine hired a nurse to care for him in their home while she was at work. The Williamses will file a joint 
                  return. Yes. 

              

Please complete the following: Indicate which of the following taxpayers qualify to claim an education credit.  

             1.   Kenneth Griffin paid qualified expenses for his son, John, whom he claims as a dependent Yes.  
             2.   Lisa Dougherty is claimed as a dependent by her mother, Florence. Lisa paid most of her own college 
                  expenses.  No, but Florence may.  

 

Please complete the following: Indicate whether the following taxpayers qualify for EITC. Assume that all taxpayers, 
dependents and qualifying children meet the eligibility requirements to potentially receive EITC.   

             1.   Ronald (28) is a single taxpayer who has no dependents. Ronald’s earned income and AGI in 2009 was 
                  $10, 281, all from wages. He had no other income. He is a U.S. citizens Yes.  
             2.   Marty (24) is a single taxpayer who has one dependent, Mindy (2). Mindy is Marty’s daughter and she 
                  lived with him for all of 2009. No one else lived with Marty. Marty’s earned income and AGI was $34, 457, 
                  all from wages. He had no other income. Both Marty and Mindy are U.S. citizens. Marty is not a full‐time 
                  student. Yes.  
             3.   Rosalee (19) is a single taxpayer who has no dependents. Rosalee’s earned income and AGI in 2009 was 
                  $8974, all form wages. She had no other income. She is a U.S. citizen. No.  
             4.   Juan (52) is a single taxpayer who has no dependents. Juan’s earned income and AGI in 2009 was $15,021, 
                  all from wages. He had no other income. Juan is a U.S. citizen. Juan had $3200 in investments during the 
                  year which he did not use withdrawal. No. 

 

 

                                     
     


    Welcome to the Tax TeleCourse!  
     
    TeleCourse #7: AARA– Tuesday, January 5th, 2010, 7‐8pm 
    Dial (888) 742‐8686 just before 7pm, and when prompted, enter the Conference ID, which is 6251387#. 
     
    TeleCourse #8: Montana 2M – Part 1: residency, itemized vs. standard, additions to federal AGI‐Michael 
    Van Auken (Jan 7) 
    TeleCourse #9: Montana 2M – Part 2: subtractions to federal AGI, tax credits, other issues – Michael Van 
    Auken(Jan 12) 
    TeleCourse #10: Final preparation before tax season begins (Jan 14) 
     

    What We’ll Cover Today:                                    Materials you need for this 
              American Recovery and Reinvestment Act           TeleCourse: 
              Making Work Pay credit 
                                                                   Student Training Guide (IRS Pub. 4491) 
              American Opportunity Credit 
                                                                   Volunteer Resource Guide (IRS Pub. 4012) 
              First Time Homebuyer Credit 
                                                                   Form 1040 
              Changes to: Earned Income Tax Credit, Child 
                                                                   This page 
              Tax Credit  
                                                                   Form 5405, Schedule M 
     
               

    Today’s Trainer:  
    Wendi Castle, Senior Stakeholder Relationship, Internal Revenue Service 

    For more information on trainings please contact:  
    Robert Coble, Program Support Coordinator  
    Montana Credit Unions for Community Development 
    1‐800‐745‐5546, ext. 142, robert@mcun.org  
    www.montanacreditunions.coop  

     
     
    Notes: 

 
 
 
 

     
     
SCHEDULE M                                                                                                                         OMB No. 1545-0074
                                               Making Work Pay and Government
(Form 1040A or 1040)

Department of the Treasury
                                                       Retiree Credits                                                                2009
                                                                                                                                   Attachment
Internal Revenue Service   (99)    Attach to Form 1040A, 1040, or 1040NR.                     See separate instructions.           Sequence No.   166
Name(s) shown on return                                                                                                      Your social security number



  1a Important: See the instructions if you can be claimed as someone else’s dependent or are filing Form 1040NR.
     Check the “No” box below and see the instructions if (a) you have a net loss from a business, (b) you received
     a taxable scholarship or fellowship grant not reported on a Form W-2, (c) your wages include pay for work
     performed while an inmate in a penal institution, (d) you received a pension or annuity from a nonqualified
     deferred compensation plan or a nongovernmental section 457 plan, or (e) you are filing Form 2555 or 2555-EZ.

       Do you (and your spouse if filing jointly) have 2009 wages of more than $6,451 ($12,903 if married filing jointly)?
           Yes. Skip lines 1a through 3. Enter $400 ($800 if married filing jointly) on line 4 and go to line 5.
           No. Enter your earned income (see instructions)                                   1a

   b Nontaxable combat pay included on
     line 1a (see instructions)                               1b
  2 Multiply line 1a by 6.2% (.062)                                                            2

  3    Enter $400 ($800 if married filing jointly)                                             3

  4    Enter the smaller of line 2 or line 3 (unless you checked “Yes” on line 1a)                                           4

  5    Enter the amount from Form 1040, line 38*, or Form 1040A, line 22                       5

  6    Enter $75,000 ($150,000 if married filing jointly)                                      6

  7    Is the amount on line 5 more than the amount on line 6?
           No. Skip line 8. Enter the amount from line 4 on line 9 below.
           Yes. Subtract line 6 from line 5                                                    7

  8    Multiply line 7 by 2% (.02)                                                                                           8

  9    Subtract line 8 from line 4. If zero or less, enter -0-                                                               9

10     Did you (or your spouse, if filing jointly) receive an economic recovery payment in 2009? You
       may have received this payment if you received social security benefits, supplemental security
       income, railroad retirement benefits, or veterans disability compensation or pension benefits (see
       instructions).
            No. Enter -0- on line 10 and go to line 11.
            Yes. Enter the total of the payments received by you (and your spouse, if filing                                 10
                 jointly). Do not enter more than $250 ($500 if married filing jointly)

11     Did you (or your spouse, if filing jointly) receive a pension or annuity in 2009 for services performed
       as an employee of the U.S. Government or any U.S. state or local government from work not
       covered by social security? Do not include any pension or annuity reported on Form W-2.
          No. Enter -0- on line 11 and go to line 12.
          Yes. ● If you checked “No” on line 10, enter $250 ($500 if married filing jointly
                   and the answer on line 11 is “Yes” for both spouses)
                 ● If you checked “Yes” on line 10, enter -0- (exception: enter $250 if filing                               11
                   jointly and the spouse who received the pension or annuity did not receive
                   an economic recovery payment described on line 10)
12     Add lines 10 and 11                                                                                                   12
13     Subtract line 12 from line 9. If zero or less, enter -0-                                                              13
14     Making work pay and government retiree credits. Add lines 11 and 13. Enter the result here
       and on Form 1040, line 63; Form 1040A, line 40; or Form 1040NR, line 60                                               14

       *If you are filing Form 2555, 2555-EZ, or 4563 or you are excluding income from Puerto Rico, see instructions.
For Paperwork Reduction Act Notice, see Form 1040A, 1040, or                       Cat. No. 52903Q              Schedule M (Form 1040A or 1040) 2009
1040NR instructions.
                                                                                                                OMB No. 1545-0074
Form   5405
(Rev. February 2009)
                                          First-Time Homebuyer Credit
                                                         Attach to Form 1040                                          2008
Department of the Treasury                                                                                      Attachment
Internal Revenue Service                                                                                        Sequence No.     163
Name(s) shown on return                                                                                   Your social security number



 Part I        General Information
 A    Address of home qualifying for the credit (if different from the address shown on return)

 B    Date acquired (see instructions)

 C    If you are choosing to claim the credit on your 2008 return for a main home bought after December 31, 2008, and before
      December 1, 2009, check here (see instructions)

 Part II       Credit


 1    Enter the smaller of:
      ● $7,500 ($8,000 if you purchased your home in 2009), but only half of that amount if married
      filing separately, or
      ● 10% of the purchase price of the home.
      If someone other than a spouse also held an interest in the home, enter only your share of this
      amount (see instructions)                                                                           1
 2    Enter your modified adjusted gross income (see instructions)            2
 3    Is line 2 more than $75,000 ($150,000 if married filing jointly)?
      No. Skip lines 3 through 5 and enter the amount from line 1 on line 6.
      Yes. Subtract $75,000 ($150,000 if married filing jointly) from the
      amount on line 2 and enter the result                                   3
 4    Divide line 3 by $20,000 and enter the result as a decimal (rounded to at least three places).
      Do not enter more than 1.000                                                                        4                X      .
 5    Multiply line 1 by line 4                                                                           5
 6    Subtract line 5 from line 1. This is your credit. Enter here and on Form 1040, line 69              6
General Instructions                                                Who Cannot Claim the Credit
Section references are to the Internal Revenue Code.                You cannot claim the credit if any of the following apply.
                                                                      1. Your modified adjusted gross income is $95,000 or
Purpose of Form                                                     more ($170,000 or more if married filing jointly). See the
Use Form 5405 to claim the first-time homebuyer credit.             instructions for line 2.
The credit may give you a refund even if you do not owe               2. You are, or were, eligible to claim the District of
any tax.                                                            Columbia first-time homebuyer credit for any tax year.
   For homes purchased in 2008, the credit operates                 This rule does not apply for a home purchased in 2009.
much like an interest-free loan. You generally must repay             3. Your home financing comes from tax-exempt
it over a 15-year period. For homes purchased in 2009,              mortgage revenue bonds. This rule does not apply for a
you must repay the credit only if the home ceases to be             home purchased in 2009.
your main home within the 36-month period beginning on
                                                                      4. You are a nonresident alien.
the purchase date. See Repayment of Credit on page 2.
                                                                      5. Your home is located outside the United States.
Who Can Claim the Credit                                              6. You sell the home, or it ceases to be your main
In general, you can claim the credit if you are a first-time        home, before the end of 2008.
homebuyer. You are considered a first-time homebuyer if:              7. You acquired your home by gift or inheritance.
● You purchased your main home located in the United                  8. You acquired your home from a related person.
States after April 8, 2008, and before December 1, 2009.              A related person includes:
● You (and your spouse if married) did not own any other                  a. Your spouse, ancestors (parents, grandparents,
main home during the 3-year period ending on the date of              etc.), or lineal descendants (children, grandchildren,
purchase.                                                             etc.).
   If you constructed your main home, you are treated as                  b. A corporation in which you directly or indirectly
having purchased it on the date you first occupied it.                own more than 50% in value of the outstanding stock
Main home. Your main home is the one you live in most                 of the corporation.
of the time. It can be a house, houseboat, housetrailer,                  c. A partnership in which you directly or indirectly
cooperative apartment, condominium, or other type of                   own more than 50% of the capital interest or profits
residence.                                                             interest.
For Paperwork Reduction Act Notice, see page 3.                       Cat. No. 11880I                   Form   5405   (2008) (Rev. 2-2009)
       Form
              1040           Department of the Treasury—Internal Revenue Service

                             U.S. Individual Income Tax Return                                          2009                          (99)       IRS Use Only—Do not write or staple in this space.

                              For the year Jan. 1–Dec. 31, 2009, or other tax year beginning                         , 2009, ending                   , 20                     OMB No. 1545-0074
       Label             L    Your first name and initial                                  Last name                                                                     Your social security number
       (See              A
       instructions      B
       on page 14.)      E    If a joint return, spouse’s first name and initial          Last name                                                                      Spouse’s social security number
                         L
       Use the IRS
       label.            H    Home address (number and street). If you have a P.O. box, see page 14.                                                  Apt. no.                   You must enter
       Otherwise,        E
                         R
                                                                                                                                                                                your SSN(s) above.
       please print
       or type.          E    City, town or post office, state, and ZIP code. If you have a foreign address, see page 14.                                            Checking a box below will not
                                                                                                                                                                     change your tax or refund.
       Presidential
Class Election Campaign
      #1                         Check here if you, or your spouse if filing jointly, want $3 to go to this fund (see page 14)                                                 You                 Spouse

                                1        Single                                                                         4             Head of household (with qualifying person). (See page 15.) If the
       Filing Status
                                2        Married filing jointly (even if only one had income)                                         qualifying person is a child but not your dependent, enter this
       Check only one           3        Married filing separately. Enter spouse’s SSN above                                          child’s name here.
       box.                              and full name here.                                                            5             Qualifying widow(er) with dependent child (see page 16)
                                6a         Yourself. If someone can claim you as a dependent, do not check box 6a .                                          .   .   .     .         Boxes checked
       Exemptions                                                                                                                                                                    on 6a and 6b
                                 b       Spouse   .           .   .     .   .     .   .   .   .     .   .   .    .      .     .   .      .   .    .    .     .   .   .     .         No. of children
                                 c    Dependents:                                                    (2) Dependent’s                (3) Dependent’s (4)  if qualifying              on 6c who:
                                                                                                                                                                                     ● lived with you
                                                                                                  social security number          relationship to you child for child tax
 Class #2                             (1) First name                  Last name                                                                       credit (see page 17)           ● did not live with
                                                                                                                                                                                     you due to divorce
                                                                                                                                                                                     or separation
       If more than four                                                                                                                                                             (see page 18)
       dependents, see                                                                                                                                                               Dependents on 6c
       page 17 and                                                                                                                                                                   not entered above
       check here                                                                                                                                                                    Add numbers on
                                 d    Total number of exemptions claimed                  .   .     .   .   .    .      .     .   .      .   .    .    .     .   .   .     .         lines above
 Class #3
                                7     Wages, salaries, tips, etc. Attach Form(s) W-2  .                     .    .      .     .   .      .   .    .    .     .   .         7
     Income
                                8a    Taxable interest. Attach Schedule B if required .                     .    .      .     .   .      .   .    .    .     .   .        8a
                                  b   Tax-exempt interest. Do not include on line 8a .                      .    .          8b
       Attach Form(s)
                                9a    Ordinary dividends. Attach Schedule B if required      . . . . . . . . . .                                                 .        9a
       W-2 here. Also
       attach Forms              b    Qualified dividends (see page 22) . . . . . . .               9b
       W-2G and               10      Taxable refunds, credits, or offsets of state and local income taxes (see page 23) .                                       .        10
       1099-R if tax          11      Alimony received . . . . . . . . . . . . . . . . . . . .                                                                   .        11
       was withheld.
                              12      Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . .                                                            12
                              13      Capital gain or (loss). Attach Schedule D if required. If not required, check here                                                  13
       If you did not         14      Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . .                                                               14
       get a W-2,
       see page 22.           15a     IRA distributions .         15a                                b Taxable amount (see page 24)                                       15b
                              16a     Pensions and annuities 16a                                     b Taxable amount (see page 25)                                       16b
                              17      Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E                                          17
       Enclose, but do        18      Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . .                                                                 18
       not attach, any
       payment. Also,         19      Unemployment compensation in excess of $2,400 per recipient (see page 27) . . .                                                      19
       please use             20a     Social security benefits 20a                          b Taxable amount (see page 27)                                                20b
       Form 1040-V.           21      Other income. List type and amount (see page 29)                                                                                    21
                              22      Add the amounts in the far right column for lines 7 through 21. This is your total income                                           22
                              23      Educator expenses (see page 29) . . . . . . .                  23     Reduces Income
       Adjusted               24      Certain business expenses of reservists, performing artists, and
       Gross                          fee-basis government officials. Attach Form 2106 or 2106-EZ                           24
       Income                 25      Health savings account deduction. Attach Form 8889 .                                  25
                              26      Moving expenses. Attach Form 3903 . . . . .                                .          26
                              27      One-half of self-employment tax. Attach Schedule SE                        .          27
      Class #4                28      Self-employed SEP, SIMPLE, and qualified plans    .                        .          28
                              29      Self-employed health insurance deduction (see page 30)                              29
                              30      Penalty on early withdrawal of savings . . . . . .                                  30
                              31a     Alimony paid b Recipient’s SSN                                                     31a
                              32      IRA deduction (see page 31)     . . . . .                         .   .    .          32
                              33      Student loan interest deduction (see page 34)                     .   .    .          33
                              34      Tuition and fees deduction. Attach Form 8917                      .   .    .          34
                              35      Domestic production activities deduction. Attach Form 8903   35
                              36      Add lines 23 through 31a and 32 through 35 . . . . . . .                                           .   .    .    .     .   .        36     Reduces Income
                              37      Subtract line 36 from line 22. This is your adjusted gross income                                  .   .    .    .     .            37
       For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 97.                                                         Cat. No. 11320B                               Form   1040     (2009)
Form 1040 (2009)                                                                                                                                                                            Page 2
                   38    Amount from line 37 (adjusted gross income)  . . . .                              .    .     .       .   .    .     .      .     .   .    38
Tax and
Credits
                   39a   Check
                         if:     {    You were born before January 2, 1945,
                                      Spouse was born before January 2, 1945,                                             }
                                                                                                         Blind. Total boxes
                                                                                                         Blind. checked         39a
Standard             b   If your spouse itemizes on a separate return or you were a dual-status alien, see page 35 and check here 39b
Deduction          40a   Itemized deductions (from Schedule A) or your standard deduction (see left margin) . .                                                    40a     Reduces Income
for—
● People who         b   If you are increasing your standard deduction by certain real estate taxes, new motor
check any                vehicle taxes, or a net disaster loss, attach Schedule L and check here (see page 35) . 40b
box on line
39a, 39b, or       41    Subtract line 40a from line 38 . . . . . . . . . . . . . . . . . . .                                                                      41
40b or who
                                                             Class #5
                   42    Exemptions. If line 38 is $125,100 or less and you did not provide housing to a Midwestern
can be
claimed as a             displaced individual, multiply $3,650 by the number on line 6d. Otherwise, see page 37 . .                                                42      Reduces Income
dependent,
see page 35.       43    Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- .                                          .    43       The Magic Line     ***
● All others:      44    Tax (see page 37). Check if any tax is from: a     Form(s) 8814                                        b        Form 4972 .               44
Single or          45    Alternative minimum tax (see page 40). Attach Form 6251 . . .                                        . .      . . . . .                   45
Married filing
separately,        46    Add lines 44 and 45 .        .    .   .   .   .     .   .     .     .   .   .     .    .     .       .   .     . . . .                    46
$5,700             47    Foreign tax credit. Attach Form 1116 if required .                  .   .   .              47                Reduces Tax
Married filing     48    Credit for child and dependent care expenses. Attach Form 2441                             48
jointly or
Qualifying         49    Education credits from Form 8863, line 29 . . . . .                    49                                                                          Class #6
widow(er),
$11,400            50    Retirement savings contributions credit. Attach Form 8880              50
                                                                                                                                                                            lines 48, 49,
Head of            51    Child tax credit (see page 42) . . . . . . . . .                       51
household,         52    Credits from Form: a       8396 b           8839 c         5695        52                                                                          50, and 51
$8,350
                   53    Other credits from Form: a   3800 b         8801 c                     53
                   54    Add lines 47 through 53. These are your total credits . . . . .                                      .   .    .     .      .     .   .    54         Reduces Tax
                   55    Subtract line 54 from line 46. If line 54 is more than line 46, enter -0-                            .   .    .     .      .     .        55
Other              56    Self-employment tax. Attach Schedule SE . . . .                             . . . .                  .   .    .    . .           .   .    56        Increases Tax
                   57    Unreported social security and Medicare tax from Form:                      a   4137                     b        8919           .   .    57
Taxes              58    Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required           . .                                 58
                   59    Additional taxes: a    AEIC payments b                        Household employment taxes. Attach Schedule H                               59
                   60    Add lines 55 through 59. This is your total tax               . . . . . . . . . . . . .                                                   60
Payments           61    Federal income tax withheld from Forms W-2 and 1099 . .                                    61
                   62    2009 estimated tax payments and amount applied from 2008 return                            62
                   63    Making work pay and government retiree credits. Attach Schedule M                          63
If you have a      64a   Earned income credit (EIC) . . . . . . . . . .                                         64a                     important!
qualifying
child, attach        b   Nontaxable combat pay election   64b
Schedule EIC.      65    Additional child tax credit. Attach Form 8812           .     .     .   .   .     .        65                  important!
                   66    Refundable education credit from Form 8863, line 16 . .                           .        66
                   67    First-time homebuyer credit. Attach Form 5405 . . .                               .        67
                   68    Amount paid with request for extension to file (see page 72)                      .        68
                   69    Excess social security and tier 1 RRTA tax withheld (see page 72)                          69
                   70    Credits from Form: a   2439 b      4136 c     8801 d      8885 70
                   71    Add lines 61, 62, 63, 64a, and 65 through 70. These are your total payments .                                       .      .     .        71      Creates Refunds
Refund             72    If line 71 is more than line 60, subtract line 60 from line 71. This is the amount you overpaid                                           72
Direct deposit?    73a   Amount of line 72 you want refunded to you. If Form 8888 is attached, check here                                           .              73a
See page 73
and fill in 73b,
                     b   Routing number                                             c Type:     Checking                                                Savings
73c, and 73d,        d   Account number
or Form 8888.      74    Amount of line 72 you want applied to your 2010 estimated tax    74
Amount             75    Amount you owe. Subtract line 71 from line 60. For details on how to pay, see page 74 .                                                   75
You Owe            76  Estimated tax penalty (see page 74) . . . . . . . .                76
                    Do you want to allow another person to discuss this return with the IRS (see page 75)?                                               Yes. Complete the following.         No
Third Party
Designee            Designee’s                                                       Phone                                                       Personal identification
                    name                                                             no.                                                         number (PIN)
Sign                Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief,
Here                they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Joint return?       Your signature                                               Date                    Your occupation                                           Daytime phone number
See page 15.
Keep a copy
for your            Spouse’s signature. If a joint return, both must sign.       Date                    Spouse’s occupation
records.
                    Preparer’s                                                                           Date                                                      Preparer’s SSN or PTIN
Paid                signature
                                                                                                                                           Check if
                                                                                                                                           self-employed
Preparer’s          Firm’s name (or                                                                                                               EIN
Use Only            yours if self-employed),
                    address, and ZIP code                                                                                                         Phone no.
                                                                                                                                                                                 Form 1040 (2009)
Homework after the TeleConference!                                                     ☺       

Read the following chapters in your Student Training Guide: 

    •   Chapters: 24( p. 5), 26, 29 (pg. 4‐8), 31  

 

Please complete the following: Indicate which of the following taxpayers qualify to claim the Making Work Pay Credit.  

             1.   Alice Keeler is 22 and a full time student. She works part time and lives at home with her parents. Her 
                  parents will claim her on their tax return.  
             2.   Christine Smith has been retired for 2 years and receives a pension as her only income. She files a tax 
                  return every year and wants to know if she can claim the Making Work Pay Credit on her tax return. 
             3.   Paul is 26 and works full time at an auto body shop. He does not have any dependents and will claim 
                  himself on his tax return. Is he eligible for the Making Work Pay Credit?  

              

Please complete form 5405 First Time Homebuyer Credit for the following individual.   

             3.   Kenneth Griffin is buying his first home in 10 years. He had rented an apartment but bought a home 
                  worth $75,000 on April 23rd 2009. Kenneth intends to live in the home for more than 3 years and this will 
                  be his only home. Kenneth has no dependents and a total income of $40,000 in 2009. He is a full citizen 
                  and the home is located in the United States. Please complete form 5405 for Kenneth.  

 

				
DOCUMENT INFO
Description: Tax Homework document sample